Top Scams That Result in Workers’ Comp Fraud
As an employer, you want to take good care of your people. But to do that, you need to be able to dedicate your resources to safety plans and genuine injury claims where a worker truly needs support. But for every system of support, there are scams that seek to take advantage at everyone else's expense.
Employers in a wide variety of industries face the risk of becoming the targets of workers' compensation scams. Often referred to as Claimant Fraud in the insurance industry, workers' compensation scams occur when an employee or medical provider takes advantage of the system for their own benefit. Together, these cases cost employers $5-7 billion dollars annually while being difficult to identify or prove.
Workers’ Comp Fraud to Watch For
Having a better understanding of the most common categories of workers’ comp fraud can help your business become less susceptible to scams and better able to provide for those few employees with a legitimate and well-managed claim.
This is a guide to the top four scams that result in workers' compensation fraud.
Workers’ Comp Scam #1 - Injuries Falsely Attributed to Work
The first type of workers’ comp fraud is false attribution. This occurs when an employee is injured outside of the working environment but claims a work-related injury. This type of fraud is unfortunately very common and difficult to disprove.
A typical example of false attribution is an employee injured during personal weekend activities. They often arrive before anyone else on Monday and claim to sustain the injury on the job. Other examples may be a personal injury that the employee allows to become exacerbated on the job to claim medical care through workers' compensation instead of their personal medical insurance.
Detecting false attribution can best be achieved through comprehensive safety and security measures throughout your workplace and work sites, along with a requirement for immediate injury reporting.
Learn more about Proactive Claims Management: How It Saves Businesses Thousands on Workers' Compensation
Workers’ Comp Scam #2 - Provider Fraud
The second common workers' compensation scam is provider fraud. In this case, some unscrupulous medical providers will inflate medical bills for a patient. They do this by scheduling unnecessary treatments and marking an injury as requiring more medical expenses than the employee truly needs to recover, knowing that workers' compensation is paying for it all. While it may look like a no-lose situation to the medical provider, the inflated costs eat away at an otherwise supportive employer.
In provider fraud cases, the employee is often unaware that their injury claim is being used to overcharge the company. They trust the medical provider to know what is necessary to facilitate their best recovery. However, provider fraud drives up the cost of each injury for employers, especially when the fraudulent providers are part of your policy's care network. It can even rob employers of the workers' productivity if trumped-up diagnoses extend the period of missed work.
Catching provider fraud often requires diversified medical opinions and an accurate early diagnosis of the injury.
Workers’ Comp Scam #3 - Misrepresenting an Injury or Severity
Sometimes a genuine workplace injury will be exaggerated to gain more benefits than the injury warrants. While playing up an injury is a common temptation, misrepresenting or exaggerating the severity of a workplace injury becomes fraud when used to gain undue paid time off, medical benefits, and other awards associated with a workers' compensation settlement. This type of fraud is problematic because the injury is legitimate, but the severity is not.
This type of fraud is harmful because it feeds into deception in the workplace and disadvantages the company and people who may genuinely need post-injury support.
Those caught and proven to be inflating or misrepresenting their injuries can be held responsible for their fraudulent claims. They may face fines and even criminal charges for their efforts to defraud workers' compensation.
Workers’ Comp Scam #4 - Double Dipping on Disability
Double-dipping is when an employee receives disability payments from their employer but does side work and is paid under the table at the same time. In other words, they are receiving double income while doing work they (and often a doctor) have attested that they cannot do.
When a workplace injury temporarily or permanently disables an employee, their claim includes a doctor's orders to avoid certain types of labor. When light work is unavailable or possible with the employer, they receive 2/3 wage compensation at the employer's cost for the duration of their recovery.
In this situation, it is legal for employees to seek light work on their own, like work-at-home phone support. However, it becomes workers' compensation fraud if the employee starts work they have attested that they cannot safely do and are under doctor's orders not to do. Not only is this fraudulent, but it may also genuinely wind up worsening their injury and extending real disability in addition to defrauding the business for lost wages.
How to Protect Your Company from Workers’ Comp Fraud
Workers' compensation fraud harms more than just the company's bottom line. It also hurts injured employees who may find claims approval more difficult due to rising costs. How can you protect your company from workers' compensation fraud while still caring for employees with genuine injuries and claims?
The answer is twofold. First, a more comprehensive safety plan can help close "loopholes" where an injury could be faked or misrepresented. Second, a more thorough, accurate, and proactive approach to managing workers' compensation claims can help you build a comprehensive recovery plan for genuine claimants and more easily catch fraudsters in the act.
Prevent Workers’ Comp Fraud with Alloy Employer Services
At Alloy Employer Services, we can help you empower your safety strategy and increase the accuracy of your workers' compensation claims management. Together, these methods can help you quickly detect fraud while taking better care of employees needing injury support. We will help you streamline your workers' compensation claims management for a more robust, affordable, and effective support system designed for fraud resistance.
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